The impact of litigation risk on the strategic timing of management earnings forecasts |
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| Authors: | Andrew B. Jackson Gerry Gallery Maria C. A. Balatbat |
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| Affiliation: | 1. School of Accounting, The University of New South Wales, Sydney, NSW, Australia;2. School of Accountancy, Queensland University of Technology, Brisbane, QLD, Australia |
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| Abstract: | This paper examines whether managers strategically time their earnings forecasts (MEFs) as litigation risk increases. We find as litigation risk increases, the propensity to release a delayed forecast until after the market is closed (AMC) or a Friday decreases but not proportionally more for bad news than for good news. How costly this behaviour is to investors is questionable as share price returns do not reveal any under‐reaction to strategically timed bad news MEF released AMC. We also find evidence consistent with managers timing their MEFs during a natural no‐trading period to better disseminate information. |
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| Keywords: | Strategic disclosure Management earnings forecasts Disclosure timing Litigation risk Continuous disclosure Regulation |
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